India's market regulator, the Securities and Exchange Board of India (SEBI), has reportedly rejected settlement applications from 13 overseas funds holding stakes in Adani Group companies. The decision, communicated last week, marks a significant development in a long-running probe.
The investigation, initiated in 2020, aimed to ascertain whether these overseas portfolio investors were genuine public shareholders or entities acting on behalf of the Adani Group's founders. According to a report, the funds' proposed settlement terms did not meet SEBI's requirements, leading to the rejections.
Reasons for Rejection
Sources indicate that some of the funds were unwilling to provide information deemed necessary by the regulator to settle the case. Additionally, others resisted demands to disgorge money sought by SEBI. The Economic Times reported that SEBI informed representatives of the funds about the rejection of their applications last week.
The funds under SEBI's scrutiny include prominent names such as Albula Investment Fund, Cresta Fund, Asia Investment Corporation (Mauritius), APMS Investment Fund, Elara India Opportunities Fund, Vespera Fund, and LTS Investment Fund. While these funds previously held significant stakes in listed Adani Group companies, Bloomberg reported that their holdings have since been reduced, according to the latest shareholding data.
Broader Context and Prior Scrutiny
This development adds a fresh twist to a multi-year investigation that gained international attention following a 2023 report by former short seller Hindenburg Research. The Hindenburg report alleged corporate malpractice at the Adani Group, referencing the ongoing SEBI probe. The ports-to-power conglomerate has consistently denied these allegations.
SEBI had previously asked some global funds in 2024 to defend themselves against potential violations of disclosure norms. The Adani Group has maintained it has no links to the funds, which faced intense scrutiny in June 2021 for investing a substantial portion of their assets in Adani stocks. It's important to note that Business Today could not independently verify this report at the time of publication.